Around 2:45 pm today, I got news from my friends at BSE that rumours were widespread about ICICI bank thinking of filing bankruptcy but the RBI not allowing it to do so. This was when Sensex had tanked by more than 280 points and Nifty was down by more than 90 points.
When i got the news confirmed, I was told that the rumour was injected on purpose by some traders are BSE so that ICICI stock gets slaughtered and can be bought at throwaway prices for short term gains. I must admit, I had heard about “toxic trading” but this is the first time I saw it in action. My source told me that the traders made more than Rs 37 lakhs per trade because of this and they entered the strategy in 3 phases. That means that these people took away more than Rs 1 crore by the close of the session at the expense of retail investors.
Toxic Trading is a strategy which is unethical in nature. In this, rumours, which act as toxic news, are spread in the market to adversely or positively impact the stock price of a company and trade on this in order to make short term gains. This works well when the stock in consideration already has some negative or positive event affecting it. This impact is multiplied by using such toxic news. Toxic Trading was possible today in ICICI on back of the news that it had exposure to Lehman Brothers and as a consequence of Lehman going bankrupt, it would book a huge loss.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment